Use the following information for the next two questions. Firms X and Y have the following borrowing costs: Company X Company Y Fixed-Rate Borrowing Costs Floating-Rate Borrowing Costs 9.5% 7.5% LIBOR +1.25% LIBOR A swap bank offer the following quote for an interest only swap: 7.1-7.6 (against LIBOR) 1) X wants a fixed loan. What would be their all in cost if instead of getting a fixed loan directly they initially get a floating loan and swap it using the above quote? a. 8.5% b. 8.85% C. 8.95% d. 8.65% e. None of the above

(Following Rates are Quoted)     Company A Company B Credit Rating A B Fixed Rate 6% 8% Floating Rate LIBOR+1% LIBOR+1.5%   Which company has a relative advantage and in which market? Which company has an absolute advantage and in which market Company A wants to borrow floating. Company B wants to borrow fix. Build a proper SWAP that benefit the two companies.

9) Find the maximum value of no arbitrage forward bid price and the minimum value of no arbitrage forward ask price by using the following information. Interest rates: = 7% for borrowing 2% for borrowing ¡USD iJPY Exchange rates: Spot Forward BID 0.0110 USD/JPY Fb = ? 6% for lending 1% for lending ASK 0.0125 USD/JPY Fa = ?

No need to define law of one price and what drives law of one price. I just wanted I need illustration with two examples of these questions..

Derive the inverse relationship between Price and Yield in debt markets using a property-based example where the market price doubles in value but ultimately falls by one third of the initial price and where the initial rental yield is 6%. Include an explanation or commentary along with your calculations and proof.

Company A desires a fixed-rate loan but currently has a better deal from the variable-rate market at a rate of SOFR+.03. If Company A borrows from the fixed-rate market, the cost would be .17. In contrast, Company B, which prefers a variable-rate loan, has a better deal from the fixed- rate market at .12. If Company B borrows from the variable-rate market, the cost would be SOFR+.02. Knowing both companies' needs, Bank C designed a swap deal. The deal is outlined in the following: Company A obtains a variable-rate loan at SOFR+.03. 2) Company B obtains a fixed-rate loan at .12. 3) Company A pays Bank C a fixed rate of .15 and receives a variable rate of SOFR+.02 from the bank. 1) 4) Company B pays Bank C a variable rate of SOFR+.04 and receives a fixed rate of .16 from the bank. How much is the cost saving to Company A?

Counterparty A can borrow from the floating rate market at LIBOR + 0.5% and Counterparty B can borrow from the Eurobond market at 7%. If Counterparty A pays 7.35% into the swap and Counterparty B pays the LIBOR rate plus 0.5% into the swap, then the overall cost to borrow by Counterparty B is: a. 7.85% b. LIBOR + 0.5% С. 7% d. LIBOR + 7.5% е. 7.35%

Basic Finance problem When Buying T-Bills, the dealer who offers the highest price will earn the? Select the best of the following solutions: a. Best yield b. Highest yield c. Competitive yield d. Lowest yield

This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield.  The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate  y = yield so, the price of this consol will be  Price = i/y I please need the solutions for part b)  question b)  In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…

A company can borrow funds at LIBOR minus 50 basis points. There is a swap available where one side pays 7% and the other side pays LIBOR-1%. The company is concerned that interest rates will increase and, thus, wants to change the nature of its liability from paying floating to paying fixed rate. What rate can the company pay on its lability after it engages in the swap?